Member Exclusive   //   November 28, 2023

DTC Briefing: 3 takeaways from this year’s Black Friday results

This is the latest installment of the DTC Briefing, a weekly Modern Retail+ column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. More from the series →

Unsurprisingly, it was another record-breaking Black Friday for many DTC brands. 

According to Shopify, its merchants brought in $4.1 billion in sales this Black Friday, compared to $3.36 billion in sales on the same day last year. 

But Black Friday sales alone don’t tell the full picture. Black Friday started as a single sales day, in which people had to line up at stores at the crack of dawn to receive the best deals. But now, many brands offer discounts not only on Black Friday and Cyber Monday, but throughout the entire month of November. As such, the goal for many DTC brands isn’t just to drive record revenue during the biggest sales periods, but also in the days leading up to Black Friday. And, to do so without resorting to steep discounts and a heavy reliance on paid ads. 

Many of the brands I spoke with said that they didn’t do anything drastically different this Black Friday compared to last — they all offered roughly the same discounts compared to last year. Some kicked off their sales at the beginning of November, while others started a week ahead of Cyber Monday. But this year, many brands executives said a top priority was wooing repeat customers and pushing buy more, save more discounts as inflation has made people pickier about where they spend their money. Additionally, another common goal was being more efficient with advertising spend, as DTC brands continue to prioritize profitability.

Across the board, it points to a growing realization among DTC brands that Black Friday and Cyber Monday isn’t about growing sales at all costs. Rather, the growing strategy is to get the people who already know which brands they want to shop from to spend more. 

“This moment has been ingrained in all of us that this is the sale time, this is the time to shop,” Ariel Kaye, founder and CEO of Parachute said.

An increased focus on efficiency
For apparel brand True Classic the big focus this year was not only driving more sales during Black Friday and Cyber Monday, but to do so while also pulling back on paid advertising. Paige Decker, vice president of growth at True Classic, said that as the company was reviewing its performance from last year, “we felt that we overspent a bit on some channels last year.” 

True Classic actually kicked off its sale at the beginning of November, advertising up to 60% off sitewide, and then upping that to up to 70% off the week before Black Friday and Cyber Monday. 

But even with those discounts, True Classic ultimately spent 30% less advertising its sale this year compared to last year. In turn, according to Decker, True Classic’s revenue was up 17% year-over-year, and “we drove 91% more on contribution profit.” 

“We had positive year-over-year growth on the two metrics that matter most to us, and we were able to spend less in order to achieve those goals,” Decker said. 

Other brands tried to drive efficiency by getting people to spend more. Clevr, a brand that sells powdered latte mixes, was able to drive up average order value this year by offering a gift with purchase, according to co-founder and CEO Hannah Mendoza. The brand also offered “up to” 40% off sitewide with the highest discount — 40% off — being offered to people who committed to a subscription starter kit. 

Other brands pushed bundled sales, where people get steeper discounts if they spend more. Cookware brand Caraway does this every year, but it has added more tiers as it has added more products.

This year, Caraway offered 10% off on orders of more than $85, 15% off on orders of more than $425 and 20% off on orders of more than $525. And this year, for the first time, Caraway also offered a free tea kettle on purchases of more than $975. 

“Interestingly, we had a large portion of the customer base that traded up into that tier to get the free tea kettle set, so that was a really exciting change,” Caraway founder and CEO Jordan Nathan said. 

Despite the fact that inflation continues to eat into shoppers’ wallets, DTC brands didn’t appear to offer significantly heavier discounts this year. According to fintech startup Ampla, among the brands that use its platform, the median discount offered in the week leading up to Black Friday was down 2% this year. 

Sales last for a month, but shopping times varied 
Brands were divided as to when exactly they started their Black Friday sale. The commonality is that most brands don’t wait until Black Friday to start their sale. 

Caraway and True Classic both started their Black Friday sale at the beginning of November — which they did last year as well. Meanwhile, Parachute pushed its sale live roughly a week out from Black Friday, and Clevr made its Black Friday sale available first to subscribers, starting on November 16.

Parachute’s Kaye said that she has resisted offering her sale any earlier than a week out from Black Friday due to the fact that she feels like shoppers are still trained to search for the biggest discounts the week of Black Friday. “We like to keep things really consistent for the purpose of it just helps us do our job better.” 

Decker said that True Classic saw “peak and valley” activity when it came to its Black Friday sale. “There was a peak at the very start of November clearly was some pent up demand… then we definitely saw a little bit of softness heading into week two and three.” 

By contrast, Caraway’s Nathan said that this year, the company’s sales for the first 10 days of November was slower than expected; “We typically see sales being really hot right out of the gate.” He had a couple theories as to why that was. Caraway had just offered some discounts for Prime Day, which kicked off on October 10 this year. He also speculated that consumers have become so used to brands kicking off their Black Friday sales at the beginning of November — and know that many of them will offer the same discounts for weeks on end — that there is less of an urgency for them to immediately shop a sale.

Ultimately, Nathan still thinks there are a lot of benefits to starting a Black Friday sale at the beginning of the month.

“It’s great to get out there early and pressure test the messaging and the offer and get a little ahead of other brands,” Nathan said. 

A focus on making discounts as simple as possible
Even though Black Friday sales are starting earlier than ever, by and large many startups are offering the same discounts for the entire Black Friday and Cyber Monday prior.

Mendoza of Clevr said that four years ago, when her brand ran its first Black Friday sale, “we ran a different promotion every day for five days, which I will never do again.” She said it was “unnecessary” and put a lot of technical strain on her team. 

While bigger retailers might have the bandwidth to experiment with a greater variety of discounts, startups are increasingly opting to offer one discount for the entire Black Friday. There might be some small tweaks — Clevr, for example, decided to make its Black Friday sale available to its VIP members and subscribers a few days earlier than it did to the general public. 

Caraway’s Nathan said the biggest learning from the first two weeks of its Black Friday sale was that customers wanted more clear communication about how the bundle discounts actually worked. So, Caraway added more messaging on its product detail pages, as well as on the chat box on its website, explaining exactly how much customers would save depending on how much they spend. 

The takeaway for many startups is that customers want to clearly know what discounts will be offered and when. They want to know that if they wait a few extra days to shop, they won’t see a brand offering a steeper discount. And offering clear, easy-to-understand discounts can help brands win over shoppers who are more price sensitive than usual this year because of inflation.

 “Anytime there’s been discounts out there this year, at least for us as a brand, they have over-indexed compared to prior years,” Nathan said. “Consumers are more price sensitive and are looking to buy when there are opportunities.” 

Parachute teams up with other brands on a holiday market

To drum up excitement this holiday season, Parachute is also hosting a holiday market on December 2-3, in Culver City, in partnership with other brands including Our Place, Brightland, Cuyana, Beyond Yoga, and Therabody. The event will take place in the parking lot next to Parachute’s headquarters, which the brand is turning into a European-style Winter Village. Each brand will have their own booth from which to sell products and offer holiday experiences. At the Jaymes Paper booth, for example, kids can write letters to Santa. There will be other areas like a gift wrapping station, a ski chalet-inspired hot cocoa station, and a kids play area.

There’s a $8 entry fee, with ticket sales benefitting Baby2Baby, a nonprofit that provides children living in poverty with diapers, clothing and other necessities. 

“As a brand we really love hosting events,” founder and CEO Ariel Kaye said. “People love holiday markets… so we wanted an opportunity to bring some of our favorite brands together and to really create not just a shopping event, not just like a place where people can buy products, but really a whole experience.”

Parachute thought about which brands to include based upon what categories are most popular to shop from during the holidays: there’s multiple food and beverage, homeware, apparel and beauty brands represented. Many of the participants are brands that Parachute has worked with before, or founders that Kaye knows. 

“We hope that it’s really successful, and that we can do it again,” she said.

What I’m reading

  • Apparel brand Madhappy has opened its first store in West Hollywood. 
  • Next-gen convenience store Foxtrot is merging with a Chicago competitor called Dom’s Kitchen. The two organizations will continue to operate as separate brands, albeit under a new holding company called Outfox Hospitality. 
  • More than half of Black Friday sales now come from mobile, according to Adobe Analytics. 

What we’ve covered

  • How Truff is plotting for its next phase of growth after receiving an investment from Kim Kardashian’s private equity firm. 
  • The tactics Solo Stove, Caraway and Popsmith are experimenting with this holiday season to acquire new customers
  • How brands utilized TikTok Shop this Black Friday and Cyber Monday.